A report this week from the National Audit Office(NAO), the governments spending watchdog, said Regulators must prove they can protect consumers.
Regulators said they understand the “significant difficulties” facing consumers.
Ofwat, Ofgem, Ofcom and the FCA understand the “significant difficulties” facing consumers says the report. But they can’t prove they are effectively responding to them.
“The most common problem facing consumers in these sectors was how to handle debt,” the NAO added.
The watchdog recommended that regulators do more to measure their performance “so that they can understand what is working well for consumers and what isn’t”.
Issues faced by consumers.
By far the most common consumer problem across all four sectors was dealing with debt from bills and credit repayments.
The four sectors are Ofwat, the Water Services Regulation Authority. They are the body responsible for economic regulation of the privatised water and sewerage industry in England and Wales
Ofgem, the Office of Gas and Electricity Markets. The government regulator for the electricity and downstream natural gas markets in Great Britain.
Ofcom, the Office of Communication. The UK government-approved regulatory and competition authority for the broadcasting, telecommunications and postal industries of the United Kingdom.
The FCA, the Financial Conduct Authority. The financial regulatory body in the United Kingdom. It operates independently of the UK Government. It is financed by charging fees to members of the financial services industry.
For many consumers, especially those struggling debt and making ends meet it has not been helped by real-term price increases of 28% in gas, 37% in electricity and 6% in water since 2007.
Consumers can find it difficult to get the best deal or service, leading to those who fail to switch paying a collective “loyalty penalty” of an estimated £4.1bn a year, the NAO said.
Vulnerable customers are less likely to switch, the spending watchdog noted.
15% of broadband customers complained about their service last year.
According to the NAO, 15% of broadband customers complained about their service last year. Most commonly about connection problems. While 36,000 homes were left without any water for more than a day during last year’s “Beast from the East” bad weather.
The NAO said regulators do not have a common way of measuring or sharing issues that affect consumers across the different sectors they regulate.
It added that regulators have not been specific enough in defining what they would like to see happen for consumers, saying that “high-level aims” were not matched by practical targets.
Amyas Morse, NAO head, said:
“Regulators need to do more to show the concrete results they are aiming to achieve for consumers.”
“I understand that there is a difficult balance to be struck between long and short-term outcomes. Between the needs of businesses and the interests of consumers. But at present, the regulators’ results can come across as somewhat academic and detached from people’s practical concerns and pressures.”
How the Regulators responded:
An Ofgem spokesman said:
“We agree with the NAO that regulators need to effectively measure their impact to help deliver the best possible outcomes for consumers.
He added that Ofgem “has already made progress in this area”.
“Last year, for example, we published our first Consumer Impact Report measuring how much our regulatory decisions were expected to benefit consumers. And we also publish annual reports on the state of the energy market and on the situation of vulnerable consumers.”
An Ofwat spokesperson said:
It would “look seriously” at the NAO’s recommendations.
An Ofcom spokesperson said:
“We’ll keep working closely with other regulators, exploring different ways to measure the effectiveness of our work.”
The report provides a view of the challenges that regulators, including the FCA, face when measuring their performance and understanding what works well for consumers.
Andrew Bailey, Chief Executive at the FCA, said:
‘Protecting consumers is absolutely central to the FCA and where we have identified potential harm we have taken decisive action. Our recent work in the high-cost credit market, including implementation of the price-cap in the rent-to-own market, is just one example of this.’
‘Understanding the impact of our interventions is an important part of our mission to ensure that financial markets are working in consumers’ best interests. We will consider the National Audit Office’s recommendations when evaluating our work to protect consumers.’
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